a.
Introduction:
The consolidated financial statements are prepared for providing a consolidated view of the financials of the company having subsidiary companies. The cash flows of all the subsidiary companies are shown as one entity in these statements.
To calculate:The amount to be paid by P to purchase shares of S.
b.
Introduction:
The consolidated financial statements are prepared for providing a consolidated view of the financials of the company having subsidiary companies. The cash flows of all the subsidiary companies are shown as one entity in these statements.
To calculate:The fair value of S’s net assets.
c.
Introduction:
The consolidated financial statements are prepared for providing a consolidated view of the financials of the company having subsidiary companies. The cash flows of all the subsidiary companies are shown as one entity in these statements.
To calculate:The value assigned to non-controlling interest.
d.
Introduction:
The consolidated financial statements are prepared for providing a consolidated view of the financials of the company having subsidiary companies. The cash flows of all the subsidiary companies are shown as one entity in these statements.
To calculate:The non-controlling interest to be reported in the consolidated financial statements.
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Chapter 3 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
- Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $321,300 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $357,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of January 1, 20X8, follow: Assets Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Accumulated Depreciation Total Assets Liabilities and Stockholders' Equity Accounts Payable Bonds Payable Common Stock Retained Earnings Total Liabilities and Equity Peanut Company Snoopy Company $ 24,000 34,000 72,000 $ 71,000 66,000 117,000 321,300 231,000 719,000 (392,000) $ 1,133,300 $ 66,000 195,000 481,000 391,300 $ 1,133,300 113,000 210,000 (8,000) $ 445,000 $ 22,000 66,000 195,000 162,000 $ 445,000 Required: a. Prepare the journal entry on Peanut's books for the acquisition of Snoopy on January 1, 20X8. b. Prepare a consolidation worksheet on the acquisition date, January 1,…arrow_forwardGant Company purchased 30 percent of the outstanding shares of Temp Company for $76,000 on January 1, 20X6. The following results are reported for Temp Company: Net income Dividends paid Fair value of shares held by Gant: January 1 December 31 a. Carries the investment at fair value. b. Uses the equity method. Required A Required B 20X6 $ 47,000 14,000 Required: Gant Determine the amounts reported by Gant as income from its investment in Temp for each year and the balance in Gant's investment in Temp at the end of each year assuming that Gant uses the following options in accounting for its investment in Temp: Complete this question by entering your answers in the tabs below. Income from investment Balance in investment 76,000 95,000 20X6 20X7 $ 42,000 30,000 95,000 92,000 20X7arrow_forwardOn December 31, 20X8, Paragraph Corporation acquired 80 percent of Sentence Company's common stock for $136,000. At the acquisition date, the book values and fair values of all of Sentence's assets and liabilities were equal. Paragraph uses the equity method in accounting for its investment. Balance sheet information provided by the companies at December 31, 20X8, immediately following the acquisition is as follows: Cash Accounts Receivable Inventory Fixed Assets (net) Investment in Sentence Co. Total Debits Accounts Payable Notes Payable Common Stock Retained Earnings Total Credits Assets Paragraph Corporation $ 74,000 120,000 180,000 Total Assets Liabilities and Stockholders' Equity 350,000 136,000 $860,000 Total Liabilities and Stockholders' Equity $ 65,000 350,000 150,000 295,000 $860,000 PARAGRAPH CORPORATION AND SUBSIDIARY Consolidated Balance Sheet December 31, 20X8 Required: Prepare a consolidated balance sheet for Paragraph at December 31, 20X8. Sentence Company $ 20,000…arrow_forward
- Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equal to $370,000. Paper uses the equity method to account for investments. Trial balance data for Paper and Scissor as of December 31, 20X8, are as follows: Paper Company Scissor Company Debit Credit Debit Credit Cash $ 191,000 $ 46,000 Accounts Receivable 140,000 60,000 Inventory 190,000 120,000 Investment in Scissor Company 350,400 0 Land 250,000 125,000 Buildings and Equipment 875,000 250,000 Cost of Goods Sold 250,000 155,000 Depreciation Expense 65,000 12,000 Selling & Administrative Expense 280,000 50,000 Dividends Declared 80,000 25,000 Accumulated Depreciation $ 565,000 $ 36,000 Accounts Payable 77,000 27,000 Bonds Payable 250,000 100,000 Common Stock 625,000 250,000 Retained Earnings 280,000 120,000 Sales 800,000…arrow_forwardOn January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 par common stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1, were as follows: REQUIREMENTS: USING THE ADDITIONAL INFORMATION WHAT IS THE AMOUNT OF THE: a. The investment balance on December 31 b. Dividend Income for the year c. Non-controlling interest in net income on December 31arrow_forwardPaper Company acquired 100 percent of Scissor Company's outstanding common stock for $370,000 on January 1, 20X8, when the book value of Scissor's net assets was equal to $370,000. Accumulated depreciation on this date was $24,000. Paper uses the equity method to account for investments. The following trial balance summarizes the financial position and operations for Paper and Scissor as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Scissor Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Scissor Company Total Debit $ 232,000 165,000 193,000 515,000 250,000 875,000 278,000 65,000 312,000 90,000 $ 2,975,000 Paper Company Credit $ 630,000 85,000 150,000 625,000 498,000 880,000 107,000 $ 2,975,000 Scissor Company Debit $ 116,000 97,000 115,000 1-0 125,000 250,000 178,000 12,000…arrow_forward
- Paper Company acquired 80 percent of Scissor Company’s outstanding common stock for $296,000 on January 1, 20X8, when the book value of Scissor’s net assets was equal to $370,000. Paper uses the equity method to account for investments. Trial balance data for Paper and Scissor as of December 31, 20X8, are as follows: Paper Company Scissor Company Debit Credit Debit Credit Cash $ 191,000 $ 46,000 Accounts Receivable 140,000 60,000 Inventory 190,000 120,000 Investment in Scissor Company 350,400 0 Land 250,000 125,000 Buildings and Equipment 875,000 250,000 Cost of Goods Sold 250,000 155,000 Depreciation Expense 65,000 12,000 Selling & Administrative Expense 280,000 50,000 Dividends Declared 80,000 25,000 Accumulated Depreciation $ 565,000 $ 36,000 Accounts Payable 77,000 27,000 Bonds Payable 250,000 100,000 Common Stock 625,000 250,000 Retained Earnings 280,000 120,000 Sales 800,000…arrow_forward1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the yeararrow_forwardThe following are summarized Balance Sheets as on March 31, 2020 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisitionall the assets and liabilities of S Ltd were reflected at fair valueThe Retained earnings of S Ltd. on April 1, 2019 was $ 200H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's netidentifiable assets.S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding companyarrow_forward
- On January 1, 20X3, Plimsol Company acquired 100 percent of Shipping Corporation's voting shares, at underlying book value. Plimsol uses the cost method in accounting for its investment in Shipping. Shipping's reported retained earnings of $75,000 on the date of acquisition. The trial balances for Plimsol Company and Shipping Corporation as of December 31, 20X4, follow: 24 Item Current Assets Depreciable Assets (net) Investment in Shipping Corporation Other Expenses Depreciation Expense Dividends Declared Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Dividend Income Plimsol Company Debit Credit $ 160,000 180,000 125,000 85,000 20,000 30,000 Shipping Corporation Debit Credit $ 115,000 135,000 60,000 15,000 15,000 $ 25,000 75,000 100,000 210,000 175,000 15,000 $ 600,000 $ 600,000 $ 340,000 $ 340,000 $ 20,000 50,000 50,000 Required: 1. Provide all consolidating entries required to prepare a full set of consolidated statements for 20X4. 2. Prepare a three-part…arrow_forwardArmadillo Enterprises acquired the following equity investmentsat the beginning of year 1 as trading investments. Description Number of shares Market price per share Total price Finestra Company 15,000 x $25 $387,500 BVD Company 20,000 X$18 $360,000 Market values at theend of Years 1 &2 are presented below: Market/Fair Value End of year 1 End of year 2 Finestra Company $19 $23 BVD Company |$22 $28 REQUIREMENTS: Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises sells 15,000 shares of BVD Company for $16at the beginning of year 2. Prepare the journal entry to record thesale. Prepare the adjusting journal entry required at the end of year2. Assume that ArmadilloEnterprises now holds these investments asavailable-for-sale. Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises…arrow_forwardThe following transactions appear on the Equity investments at fair value through profit or loss account of Chicker Corporation Date Particulars Debit Credit 03/1/x6 Purchased 40,000 shares of PLDT at P 30.75/share and 20,000 shares of Benpress at P 23/share P 1,690,000 07/03/x6 Purchased PAG-IBIG 15% bonds, face value P 4,000,000. Interest dates July 1 and Jan 1. Maturity date July 1, 20x9 4,000,000 11/5/x6 Sold 14,400 shares of PLDT at P 30/share And 4,000 shares of Benpress at P 25/share P532,000 12/31/x6 Sold PAG-IBIG bonds at 98 plus accrued interest…arrow_forward
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